THE BLOG

Has Bordeaux Killed the En Primeur Futures Market?

02/07/2014 11:48 BST | Updated 30/08/2014 10:59 BST

With all the negativity generated by the 2013 campaign, the directors of Chateau Latour must have felt the prescience of their move to exit the primeurs system. Sitting pretty, high above the fray of calculations to determine what the 2013 release should be priced at, untainted by trade accusations and producer counter-justifications. Free of the price-level juggling act so evident with one eye on lending support to the (too) highly priced but absolutely brilliant twin peaks of 2009 and 2010. With pockets deep enough to say 'let the market decide once we choose to release in a decade or so'.

First out of the blocks in 2013 was Pontet Canet - rather too soon for many given the trade had not yet tasted it - releasing at around £635+ per case. The best offer we saw was from Nickolls and Perks for £635 inclusive of free storage until autumn 2017.

Pontet Canet is a pretty good exemplar of why buyers see no need to buy the 2013 vintage en primeur. With the deliciously fruity and beautifully structured 2004 cheaper in the market; as are the fully resolved, Asian-spiced 2002 and the finely poised 2006, why would you? Just in case you might have been tempted, think again when considering the stellar 2008 (96 points from Parker and a candidate for 'wine of the vintage') that can still be had for £610 a case.

Per case - the last 6 vintages

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3 comparable back vintages (per 75cl bottle)

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The classic and delectable Chateau Figeac is an example of 2013 primeurs pricing that isn't so far off - the cheapest in the market bar the decent 2012. But the Libournais experienced the worst of times in 2013, so buyers will be betting on future appreciation of Rolland's first vintage at Figeac where he had influence over more than just the assemblage. Personally I wouldn't bank on it given the difficulties of the vintage.

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Which brings us to the main point. Whether you are buying to drink, or to drink and sell on in part or whole, en primeur makes no sense as long as there isn't a hefty risk discount attached to buying early. Gone are the days where the decent classed growths and their right bank equivalents needed the cash in to subsidise the élevage of the next vintage, and were prepared to offer the buyer of futures substantial discounts to market level valuations of comparable back vintages in order to underwrite their own cash-flow.

The truth is 2013 was never going to positively impact the Bordeaux market, irrespective of their pricing. The vintage was too weak or washed-out for that to happen. In the words of Stéphane Dérancourt - "It's a very difficult year. There will be some good wines, but it's a shit year".

An upward pull on market pricing generally is only exerted by the release of a good to great vintage. 1990 being pretty much the only exception to the rule over the last 25 years. 1995/1996 pulled prices up after the recession of 1991. 2000 delivered after the Asian Crisis of 2007. What the whole market truly needs is another fine vintage, which as luck may have it 2014 could yet deliver.

The first growths did come down in price for 2013. They never were going to plumb the price depths of 2008, as many merchants had hoped for. But they will have done enough to sell through over the next few years, and there's no obvious imperative to raise more cash quickly.

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Indeed, Bordeaux is awash with the stuff after the golden financial era of 2006-2011. (Rather shockingly, some also took agricultural grants from the EU post-Lehmann with which they built glorious chais on the back of the taxpayer).

Looking forward, the next fine vintage will see prices rise, of course, but that will be the moment of truth for the en primeur system. As long as prices are favourably priced by a healthy discount to 2010, 2009 and 2005 (as I predict they will be) en primeur will spring back into life, and the rest of the secondary market will gently awake from its slumber once more.